IRS Form W-9 Request for Subcontractors

According to the IRS, how is an electrical contracting business required to handle federal payroll taxes for a properly classified independent contractor?

When your electrical contracting business pays a properly classified independent contractor for work performed, you are generally required to withhold federal payroll taxes from those payments just as you would for an employee.

According to the IRS, an electrical contracting business generally does not have to withhold federal payroll taxes from payments made to an independent contractor, but this specific tax treatment depends entirely on correctly ________ the worker first.

Match each worker scenario with the correct payroll tax handling or consequence for your electrical contracting business.

As the owner of an electrical contracting business, you bring on a specialized worker for a short-term project. Analyze the compliance workflow and arrange the following steps in the correct logical sequence to handle their compensation properly under IRS guidelines.

You own a growing electrical contracting business. For the past six months, you have been paying Mike—a licensed electrician—to handle overflow residential service calls. Mike uses your company van, wears your company uniform, follows your daily dispatch schedule, and you provide all tools and materials. You have been paying Mike as an independent contractor with no federal payroll tax withholding. Your bookkeeper flags this arrangement and urges you to review it. Which of the following is the best assessment of this situation?